This sounds like it might be a defective CCD imager. If your camera is a Canon, Canon might fix this for you for free, including free shipping both ways. This is regardless of your camera's warranty status.
Please see this link for more info.
Applicable cameras include:
A40, A60, A70, A75, A80, A85, A95, A300, A310, S1 IS, S60, S200, S230, S330, S400, S410, S500, SD100, SD110, IXUS V2/300/400/430/500, IXY Digital 200a/300a/400/450/500
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